A yen bloc in Pacific Asia: natural economic symbiosis or overblown rhetorics?

Unlike earlier studies, this paper argues that the relevant determinants of East Asian integration ought to be gravity (proximity and size of the regi onal economics). Using a gravity model of 1975-95 merchandise trade flows, strong evidence was found by East Asian economies integrating and interacti ng like never before. Interestingly, the most recent evidence also suggests that Japan is in danger of losing its place at the centre of this potentia lly self-sustaining economic system. In other words, the East Asian situati on is still unfolding as the regional economies experience a dynamic proces s of changing comparative advantage which is enhancing their competitivenes s against one another, as well as against other developed economies, includ ing Japan.